Luxury Real Estate Auctions Gain Popularity
Sellers have been turning to auctions when conventional sales methods don’t work, but some are seeing lower-than-expected sale prices or no sale at all.
NEW YORK — Real estate auction houses have seen a spike in luxury real estate service requests since 2020, but some sellers find the results aren’t what they expect.
Auction houses pitch their ability to market unique properties to a range of wealthy buyers outside of local markets and sell them in a specific time frame. Since the pandemic boom, luxury real estate takes longer to sell, so for many sellers the draw of an auction is the set timeline. An auction offers a sale date if a minimum bid is reached.
However, home auctions come with risks and may not yield the sale price or outcome that sellers wanted. In some cases, sellers get far below when they expected. In others, the auction doesn’t result in a sale at all because the reserve price isn’t met.
Redfin reported that the number of luxury homes sold in the third quarter fell 10.6% from a year ago, but despite the slowdown in sales, luxury sellers have been reluctant to lower a home's asking price.
Luxury home prices increased 9% in that same time to the highest third-quarter level on record, growing nearly three times faster than nonluxury prices, but luxury homes are taking longer to sell.
Redfin data show that on average, luxury listings spent 46 days on the market during the third quarter, up from 36 days during the same period in 2021.
Auctions tend to attract the real-estate world's quirkiest, highly personalized, or ultraluxury, resort-style homes in neighborhoods where that type of housing is atypical.
Source: Wall Street Journal (10/30/24) Clarke, Katherine; Solomon, E.B.
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